PROJECT SUMMARY/ABSTRACT Adolescent substance abuse results in significant negative outcomes and extraordinary costs for youths, their families, communities, and society. Moreover, rates of psychiatric comorbidity among substance abusing youth range from 25% up to 82%, and youths with a dual diagnosis are more than twice as costly to treat compared to those with no comorbidity. Community-based treatment for these youth most often is disjointed, with youth and families having to navigate separate treatment systems for the disorders or only receiving treatment for a single disorder. Notably, multiple studies have shown that youth with co-occurring problems have worse outcomes and return to pre-treatment levels of substance use more often and more rapidly than those without a psychiatric diagnosis. The applicant principal investigator, a new investigator, recently completed a NIDA-funded Stage I project focused on developing and piloting a psychosocial treatment specifically for youth presenting for outpatient treatment with co-occurring substance use and internalizing (i.e., mood and/or anxiety) problems. Results were promising with the experimental group exhibiting significantly less substance use and more rapid reductions in anxiety and depressive symptoms compared to the control group. In addition, extensive treatment and therapist training manuals were generated. The proposed research is a Stage II randomized clinical trial (RCT) to compare the experimental treatment (OutPatient Treatment for Adolescents; OPT-A) to an active placebo on key clinical indices from pre-treatment through 18 months. The proposed RCT (n = 160) employs the treatment manual, quality assurance protocol, and therapist training protocol developed and successfully piloted in the Stage I study, to evaluate the efficacy of OPT-A for youth referred to outpatient treatment of co- occurring substance use and internalizing problems. The following outcomes will be evaluated: drug use; mental health; behavioral, school, peer, and family functioning; and consumer satisfaction. In addition to providing a strong test of treatment efficacy, the proposed project will leverage the data collection of the RCT to provide a preliminary evaluation of putative mechanisms of action. In summary, this study will advance a promising treatment developed through the Stage I behavioral therapies development program to a Stage II controlled trial. It builds on the treatment manual, therapist training materials, and quality assurance system already developed. The intervention addresses one of the more prevalent and most challenging, costly, and understudied presenting problems among adolescent outpatients. If successful, this research could provide a considerable contribution in the treatment field for youth with co-occurring substance use and internalizing disorders.